Canadian media found an increasing number of listed international students, most of whom are Chinese students, buy expensive houses in Vancouver through mortgage. The media caution about the possible loophole for such international investment.

Vancouver Sun reported on Wednesday that the buyers of a total of 9 real estates in Vancouver's Point Grey, worth a total of 57 million Canadian dollars (CAD), were listed as international students, and all of them were thought to be Chinese students. Bank mortgages of up to 40 million CAD were used to purchase the properties.

According to Vancouver Sun, Chinese student Xuan Kai Huang bought a house there for just over 7 million CAD (5.5 million USD) and re-sold it for over 8 million in May this year. Huang earned over 1 million CAD (900 thousand USD) through the re-sale.

An investigation by The Globe and Mail said that non-Canadian citizens do not need to show income verification certificates if they can pay a set down payment when applying for mortgages in Vancouver.

This year real estate prices rose rapidly with a surge of international investment. Vancouver Sun urged the Canadian government for more control over banks providing mortgages to non-Canadian citizens.

In response to rising real estate price, the provincial government of British Colombia levied a 15% property transfer tax to non-Canadian citizens buying Vancouver residential houses or condos.

According to Cooper, the Bank of Canada's limited ability to offset a negative shock has the bank signalling the need for fiscal measures and risk-limiting regulations to lessen the gap between household debt and assets.

The Bank of Canada has said the high debt level posed a vulnerability for the financial system, and that the amount of debt compared to disposable income was becoming alarming. As as result, the ratio of household debt to disposable income (excluding pension entitlements) rose to 167.6%, up from 165.2% in Q1.

"The upward trend in household debt, which started as far back as we have data - 1990 - is showing no signs of ending anytime soon", said Benjamin Reitzes, economist at BMO Capital Markets, citing rising house prices in Canada's biggest cities, led by Toronto, and weak gains in hourly wages.

Sales of existing Canadian homes fell in August, the fourth straight monthly decline, with sales in Vancouver tumbling almost 19 percent as a tax on foreign buyers doused activity in Canada's most expensive market, the Canadian Real Estate Association said in a report that also predicted prices will start to fall in 2017.

Victoria Property Sales Continue Record Breaking Pace

September 1 2016, Victoria, BC

A total of 883 properties sold in the Victoria Real Estate Board region this August, an increase of 19.2 per cent compared to the 741 properties sold in August last year.

"August is a record breaker in more than one way. For the sixth consecutive month, we have a sales record with more sales than any other month of August on record," says Mike Nugent, 2016 President of the Board. "We also have the lowest number of listings available for sale in an August than we've seen in the last twenty years. That lack of inventory will continue to put pressure on pricing. Sales would be even higher were there more inventory available for buyers to purchase. Regardless of the low inventory, it's safe to say that by mid-September we will have surpassed the number of sales for all of 2015, with four months remaining in the year."

Inventory levels remain lower than last year, with 2,094 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2016, 43.2 per cent fewer than the 3,688 active listings at the end of August 2015.

"As we saw last month, the expected seasonal slowdown continues as we move towards the autumn," adds Nugent.  "August tends to be the slower summer month, though the year-over-year sales numbers are very strong. This shows continued consumer confidence in the Victoria real estate market. It is early to determine a trend, but we don't see any early indications that the foreign investment Property Transfer Tax implemented in Metro Vancouver has impacted sales to any extent in Victoria at this time."

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August, 2015 was $603,200. The benchmark value for the same home in August 2016 has increased by 23.8 per cent to $746,900

Call me at 250.884.3980 to discuss any real estate matter and chat about the stats or the recommendations in the IAG report.